Question

1. For each of the following persons, determine the type of unemployment that they face: (3 points) a. Barney had a job at the New Jersey Turnpike collecting tolls, but he was replaced by a computer as more drivers used E-Z Pass. b. Charlie is temporarily laid off because the factory where he works does not have enough orders to keep his shift working. c. Ellen went to night school for five years and is now looking for a job as a computer programmer. 2. Visit the Bureau of Labor Statistics website (http://www.bls.gov) to find out about recent trends in unemployment. On the BLS home page, first find the Latest Numbers: Unemployment Rate. Click on to find the unemployment rate for the past 10 years. What was the unemployment rate in April 2009? In April 2014? In April 2019? Do you notice any trend in the unemployment rate in the past 10 years? What does it mean for the economy? (2 points) 3. Suppose the working-age population is 150 million, the labor force is 125 million, and employment is 120 million. (2 points) a. What is the unemployment rate? b. Suppose that 5 million unemployed people give up their search for jobs and become discouraged workers. What is the new unemployment rate?

Answer 1

Question 1

(a)

In the given case, person lost job due to technological intervention. When technological change leads to job loss then such unemployment is said to be structural unemployment.

So,

Barney is structurally unemployed.

(b)

In the given case, person lost job due to downturn in the business cycle. Unemployment created through business cycle downturn is said to be cyclical unemployment.

So,

Charlie is cyclically unemployed.

(c)

In the given case, person is searching for job. Unemployment created because of job search is said to be frictional unemployment.

So,

Ellen is frictionally unemployed.